Blue Planet 2
Blue Planet 2

Our Blue Planet

Invest in companies that focus on sustainability to influence change

The recently broadcast BBC series "Blue Planet 2" was hugely popular. Anyone who watched it will have been amazed at some of the images that were piped through to our television screens and devices. Particularly fascinating was the spider crab "get together" where hundreds of thousands congregated in one area to shed their shells to allow them to grow - quite a sight and not something you see every day!

However, the episode that really hit home was the series finale which focussed on the damage being inflicted by the plastic pollution of the oceans. There was harrowing footage of albatross parents unwittingly feeding their chicks plastic, turtles caught up in discarded plastic fishing nets and a whale with a plastic bucket stuck on tis teeth - the result of our "throw away" society.

Plastic pollution

Narrator, David Attenborough issued a conservation rallying cry at the end of the programme which should hit home with everyone

We are at a unique stage in our history. Never before have we had such awareness of what we are doing to the planet, and never before have we had the power to do something about it. Surely we have a responsibility to care for our blue planet. The future of humanity and indeed all life on earth now depends on us.

Powerful words but the question is can we do anything about the perilous state of the oceans; is it too big a problem to tackle? As individuals we could not hope to reduce the billions of tonnes of plastics that are finding their way into the oceans but collectively and by investing in companies that focus on sustainability we could start to influence change.

What is Sustainable Investing?

Sustainable investing encompasses a wide range of different investment philosophies including

  • ESG (Environmental, social and corporate governance
  • SRI (Socially responsible investing )
  • Ethical investing
  • Impact investing
  • Values investing
  • Principles-based investing

The days are long gone where fund managers had very strict guidelines as to what they could and could not invest in (i.e. no tobacco or weapons). In today's world investment guidelines will attempt to reflect the core beliefs of any rational global citizen including:-

  • A fair day's pay for a fair day's work
  • Decent health and housing
  • Protecting the environment
  • Access to enough food and clean water

Research by Shares Magazine May 2018 has shown that these are particularly evident with the emergence of a new generation of investors referred to as Generation Y or, The Millennials - people that were born between 1982 and 2000. With an estimated $200bn a year of buying power, it gives them a meaningful voice, and one that will get louder as they get older and more interested in saving and investment leading to increased demand for suitable investment solutions.

Sustainability Themes

Fund Management groups are identifying positive and persistent global structural trends and selecting companies to invest in that align themselves to these. The key themes that they look for can be split into three broad categories:-

More Efficient

  • Improving the efficiency of energy use
  • Improving sanitation and access to clean water
  • Increasing electricity generation from renewable sources
  • Improving industrial processes 
  • Increasing waste treatment and recycling 
  • Improving the fuel efficiency of cars
  • Accelerating the transition to lower carbon fuels
  • Making transportation more efficient 

Healthier and with higher quality of life

  • Providing affordable healthcare globally
  • Connecting people (the internet of things)
  • Delivering healthier foods
  • Building better homes
  • Providing education services and content
  • Enabling innovation within the healthcare system
  • Enabling healthier lifestyles

Safer and more resilient

  • Increasing financial resilience
  • Leading in governance
  • Improving auto safety
  • Enhancing digital security
  • Better monitoring of supply chains and quality control
  • Reducing pollution from cars and industry
  • Making food production sustainable

Companies are beginning to see strong sustainability performance as the critical element in their growth strategy. The linkage between being a good company (a good corporate citizen) and financial success is strongly supported by more and more examples of the opposite (from VW and Diesel-gate, PPI mis-selling in the banking sector and BP's Gulf of Mexico disaster to name but a few). The share price of companies with poor environmental and social records generally are impacted negatively and investors tend to avoid them as a result. The need to reduce the impact that human society is having on resources and the environment is gathering pace with public awareness of the issues increasing. Companies that are attuned to public opinion will benefit as a result. 

The Future

This is very much in our hands. David Attenborough went as far as saying "life on Earth now depends on us". 

Sustainability funds, by definition, invest in companies at the fore front of their development fields, whether it is in renewable energy, pollution prevention or healthcare for example. The funds offer potentially good returns but there is also the comfort for investors that they are contributing towards the future health of the planet and its inhabitants.

There are many companies that have identified opportunities that will benefit from the demand for change that we are making as individuals. Fund choice is increasing for investors as more fund management groups launch sustainability themed funds. Contact us for further details of the options available for your ISA, Investment Account or Pension investments.

All information in this article was accurate at the date of the original publication in June 2018.